Post Office FD Vs NSC: If you want to invest ₹ 1,00,000 for 5 years, then you have the option of both 5-year FD and NSC. In such a situation, understand on the basis of calculation which scheme will give you more profit.
Post Office FD Vs NSC: Like banks, many schemes are run in post offices too. One of these is Post Office Term Deposit and the other is National Savings Certificate. Post Office TD is also called Post Office FD. Post Office FD is run for 1, 2, 3 and 5 years. Whereas money is invested in NSC for 5 years.
If you want to invest ₹ 1,00,000 for 5 years, then you have the option of both 5-year FD and NSC. 5-year FD is getting 7.5% interest, while NSC is getting 7.7% interest. Looking at the interest rate, it seems that there will be more profit in NSC, but in reality you will get more profit in post office FD. Although there is not much difference in this profit, still if we compare, the profit of FD will be more than NSC. Why is this so? Let us tell you about this-
Profit depends on this calculation
When you go to invest in a scheme, first of all you look at its interest rate. Most people think that higher interest rate means more profit. But this does not happen because the profit or loss in a scheme depends on the calculation of interest. It is important to see whether the interest rate is being calculated according to simple interest or compounding interest. Apart from this, it is also worth noting that if compounding interest is also being given on a scheme, then its calculation is being done on a quarterly basis or on an annual basis.
This is how Post Office FD is calculated
Compounding interest is given in Post Office Time Deposit at the rate of 7.5% interest. In this scheme, interest is given annually, but its calculation is done on a quarterly basis. That means if there is 7.5% interest, then it is divided into 4 parts on a quarterly basis. 7.5/4= 1.875% interest is charged on the amount every three months. In such a situation, the method of calculation will be like this – for example, if you invest Rs 1,00,000 in the scheme, then in the first three months, it will get an interest of Rs 1,875 at the rate of 1.875%. In this way the amount will become Rs 1,01,875. After the next three months, 1.875% interest will be charged on the entire amount including 1,01,875 interest. In this way, interest will be charged at the rate of 1.875% on the entire amount including interest every three months. In this way, interest will be charged at the rate of 1.875% 4 times a year and 20 times in 5 years. In this way, the maturity amount will be Rs 1,44,995 after calculating for 5 years.
This is how the calculation is done in NSC
If you invest in NSC, then you will be given interest at the rate of 7.7%. This interest rate is higher than Post Office TD. But in this, interest is calculated on an annual basis. Therefore, its profit is slightly less than FD. If you invest Rs 1,00,000 in NSC, then it will earn interest at the rate of 7.7% on Rs 1,00,000 in one year. In this way, interest of Rs 7,700 will be charged in one year. In the second year, interest at the rate of 7.7% will be charged on Rs 1,07,700. In this way, interest will be charged 5 times in 5 years on the entire amount including principal and interest and the maturity amount will be Rs 1,44,903.
This means that despite the lower interest rate, the amount you will get in Post Office FD will be Rs 92 more than NSC. This difference is undoubtedly minor, but it is worth noting that despite the lower interest rate than NSC, the profit of Post Office TD is more than NSC.
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